This week’s trifecta of unpleasant Medicare surprises

Editor’s Note: Journalist Philip Moeller, an expert on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” Send your questions to Phil.

Moeller is a research fellow at the Center on Aging & Work at Boston College and co-author of “How to Live to 100.” He wrote his latest book, The New York Times bestseller “How to Get What’s Yours: The Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. He is now working on a companion book about Medicare. Follow him on Twitter @PhilMoeller or e-mail him at medicarephil@gmail.com.

Your Medicare Questions

Medicare rules and private insurance plans can affect people differently depending on where they live. To make sure the answers here are as accurate as possible, Phil is working with the State Health Insurance Assistance Program (SHIP) and the Medicare Rights Center (MRC).

Penny – N.C.: I have long-term care insurance, and my premiums are rising drastically. My insurer offers some options for reducing the premium, but I don’t know which options would be better, because I don’t know exactly what Medicare offers. Thank you for your help.

Phil Moeller: One of the most unpleasant surprises about Medicare is that it does not cover long-term care. Medicare does cover medically necessary short-term stays (up to 100 days) in skilled nursing facilities. But these stays do not cover so-called custodial care, which is what long-term insurance covers. You could shop other long-term care insurers, but if you’ve had your policy for more than a few years, the odds of your finding a better deal are slim-to-none. Your best bet is to look at the reduced-premium services you would still be entitled to receive on your current policy.

Fred – Texas: I recently signed up with a health insurer and told the salesman that I wanted nothing to change from my previous plan. On that plan, all my prescriptions were $5 copay generics. But when I went to refill my prescriptions on my new plan, they cost way, way more—nearly $45, $120, and $210 for the three psoriasis drugs I need. The salesman said my total Medicare premium for this policy was $29 a month including all my meds, except for what I thought were modest copays. If Medicare sets which drugs are covered, how could this new company reclassify the drugs and put them in more expensive categories and make me pay so much? They said one of the drugs I need was one that they didn’t even cover at all. Now, I can choose between food, housing, or medical care, but not all three. Please give me some advice here.

Phil Moeller: Here’s another Medicare reality that may be as much of a shocker to you as it was to Fred. Medicare does not set which drugs are covered. It does require that a Part D prescription drug plan include drugs that people need to treat their conditions. Usually, plans must include a choice of at least two such drugs in its list of covered drugs, which is called the plan formulary. But the choice of which specific drugs are covered is up to the plan, not Medicare.

I don’t really know if your insurance salesman engaged in any fraudulent behavior when he was pitching your new plan to you. But if you think he or she did not tell you the truth, or otherwise misled you, Medicare has a complaint process you should explore. While your complaint is being processed, you should take a new look at the Part D plans offered where you live. Use Medicare’s Plan Finder to build your own list of the drugs you take. Plan Finder will then look at all your available drug plans and show you if these drugs are available in other plans, and what they will cost. If your complaint is upheld, you may be given a special enrollment period to sign up for a new plan. Otherwise, you’ll be stuck with your current plan until this fall’s open enrollment period for 2016 plans.

Arkady – Calif.: Do I have to pay for Medicare even if I’m not asking for any drugs? I recently applied for Medicare in case of an emergency and immediately received a bill for $314 with no explanation. What’s going on?

Phil Moeller: And now, to complete the trifecta of unpleasant Medicare surprises, the program is not voluntary, but mandatory. Everyone aged 65 or older must sign up for Medicare unless they are covered by an employer group health insurance plan. Retiree health plans don’t excuse people from being required to sign up. Poverty does not either, although in this case, the odds are the person will get financial assistance to pay Medicare premiums and many of their covered health care expenses. Or, they will sign up for Medicaid and become a so-called “dual eligible” participant.

Arkady’s $314 bill may have been his annual premium for Part B coverage. The base Part B premium is $104.90 in 2015, although people with higher incomes have to pay as much as $335.70 a month this year. I’m not sure where the $314 bill comes from, although if Arkady missed his initial enrollment period and filed late for Part B coverage, his bill might have included late-enrollment penalties. Like Mother Nature, it is not wise to fool with Medicare.

Gerry – Mich.: I have a Medicare Advantage plan with Humana. I am a 57-year-old man with prostate cancer. My question is this: Is this plan worth the extra money? Or is regular Medicare just as good? I’m asking because it seems that the Advantage Plan only covers 80 percent on many things—like imaging tests and cancer treatments—just like Medicare. Should I go back to plain old Medicare or is there a better plan I should switch to?

Phil Moeller: I am so sorry to hear about your cancer and wish you the best of luck as you battle this horrible disease. You’re right that many Medicare Advantage plans require 20-percent copays as does basic Medicare. The big difference between the two—and it can be huge—is that there is no ceiling to your cost exposure in basic Medicare, which consists of Part A hospital coverage and Part B coverage for doctors, equipment and out-patient expenses. You can pay 20 percent of a very, very big number should you require extensive health care and expensive hospital stays. That’s why lots of people also buy a Medigap policy, which, as its name suggests, can plug this copay gap.

Medicare Advantage plans, by contrast, are required by Medicare to have an annual out-of-pocket ceiling on their covered Part A and Part B expenses that in 2015 may not exceed $6,700. There is an additional and separate out-of-pocket ceiling for Part D drug expenses. I looked at the Medicare Plan Finder and picked a ZIP code near where you live. I’m not sure it’s your ZIP code, but the Humana plan in this area listed an out-of-pocket spending limit of $4,500, assuming your health care is fully provided within the network of hospitals, doctors and other health care providers used for this plan. If you go out of network, your costs will be higher. If you are otherwise satisfied with your plan, I’d keep it. During annual open enrollment this fall, you can compare other Medicare Advantage plans where you live, or you can take a look at what basic Medicare and a Medigap policy might cost you. Regardless, I’d call your insurer to make sure of your out-of-pocket limits and to find out how you can get timely information on your plan expenses.

Frank – Fla.: My wife and I both turn 65 in August of this year. We thought we needed to apply for Medicare within three months of turning 65. So we enrolled for Medicare Part A and Part B and received our Medicare ID card last week. Both of us intend to continue to work until we are 66 1/2 for large employers who provide us with medical insurance coverage. We received a letter from Medicare indicating that we would be assessed a premium surcharge because of our income levels and this would start in August 2015. We are not planning on starting our Social Security or using Medicare benefits until we retire. What should we do with the Medicare card we received? Not needing benefits at this time, we are being told to return the Medicare cards and indicate we have employer medical coverage. What should we do?

Phil Moeller: Send the card back and indicate you do not wish Part B coverage at this time. If you have not received confirmation within several weeks, call Medicare to follow up. However, cancel only Part B. Retain Part A hospital coverage. It can come in handy as a secondary payer of covered claims should either of you require pricey hospital care. But you are not required to get Part B coverage, nor pay its premiums, so long as you both have employer group health coverage.